Understanding our third quarter 2020 results
Letter to shareholders N°123
Societe Generale’s Q3 results illustrate the ability of all our businesses to rebound, with Group net income of €862 million, and they are very encouraging. The performances reflect our efforts in terms of commercial development, cost control and rigorous risk management.
In this unprecedented health crisis that we are experiencing, I hope first of all that you and your loved ones are well. Our country has entered a new lockdown phase. However, the situation is different from the one we experienced in the spring, the government wanting as far as possible to protect the economy, and we are probably better prepared. Against this backdrop, we continue to relentlessly support our customers. Since the beginning of the year, we have received applications for State Guaranteed Loans (PGE) amounting to €19.7 billion in France. Societe Generale’s teams are more committed than ever to serving their individual and corporate customers.
Societe Generale’s Q3 results illustrate the ability of all our businesses to rebound, with Group net income of €862 million, and they are very encouraging. The performances reflect our efforts in terms of commercial development, cost control and rigorous risk management. Our revenues are higher this quarter, supported by recovery in activity in retail and financial services and normalising performance in Global Markets. At the same time, we continued to reduce our costs in all our activities and we will continue our efforts, thereby confirming our 2020 objective of underlying operating expenses of around €16.5 billion. The substantial decline in our cost of risk compared to Q2 2020 reflects the quality of our asset portfolio and rigorous risk management. We therefore confirm our 2020 objective of a controlled cost of risk (around 70 basis points).
Another positive point is that we have seen a significant increase in our capital ratio (CET1 of 13.2% pro forma at end-September 2020). This includes a dividend provision in respect of the first 9 months of the year corresponding to €0.21 per share, in line with our distribution policy. This high level of capital gives the Group flexibility in terms of shareholder’s return. You are aware that, like other European banks, we are expecting a very important decision from the European regulator at the end of the year as to whether or not we are able to resume the payment of a dividend in 2021. We are aiming for a CET1 target above 12% at the end of the year, enabling us to go into 2021 with considerable confidence in our ability to finance our growth in an uncertain environment.
Our ambition is to support our customers both in the current crisis and in the longer term. We therefore want to continue to increase the added value of the services and products that we offer them and strengthen our competitiveness. The study under way on the merger of our Societe Generale and Crédit du Nord networks is an illustration of this ambition. The alliance of our two networks with very complementary strengths and expertise would enable us to create a new leading retail bank in France, with 10 million customers, combining regional presence and technological efficiency. At the same time, Boursorama, the leading online bank in France with its 2.5 million clients will pursue the very dynamic growth of its alternative model.
We also want to support our customers in their energy transition and at the end of October announced new commitments. Having been a pioneer in the development of renewable energies, we are one of the first global banks to announce a significant reduction in the short term in our overall exposure to the oil and gas extraction sector. Our responsibility is to support our customers by redirecting our portfolio of activities at a pace that is consistent with the scenario of the Paris Agreement and within the framework of an ecological transition that is economically viable and socially inclusive.
We are approaching the coming months with a combination of lucidity and confidence and will build our strategic roadmap for the next few years based on the quality of our business assets and the solidity of our balance sheet.
I would like to thank you again for your loyalty and the trust you have placed in our Group in an unprecedented health and economic crisis, as well as your long-term commitment alongside us.
Chief Executive Officer
Our Q3 2020 financial resultsQ3 2020 Financial Results Press Release (PDF - 503.88 KB)
Frédéric Oudéa presents the financial resultsWatch the video
Societe Generale group studies the creation of a new retail bank in France based on the merger of its two banking networks, Crédit du Nord and Societe GeneraleRead the Press Release
Appointment of Delphine Garcin-Meunier as Head of Group Strategy and Vincent Robillard as Head of Financial Communication and Investor RelationsRead the Press Release
Climate strategy: Societe Generale is embarking on a new stage to strengthen its leadership in the energy transition and align its activities with the Paris AgreementRead the Press Release
Katowice banks: First application report of PACTA for banks, a joint methodology to help align credit portfolios with the goals of the Paris AgreementRead the Press Release
Societe Generale annonces an additional €3 billion in financing for the Grand Paris projectRead the Press Release
Digital and innovation: Societe Generale strengthens its leadership to co-build the bank of tomorrow with its clients.